Slowdown hammers building jobs

Tens of thousands of jobs are being lost in the construction sector because of the completion of large projects and a slowdown in the awarding of big contracts to the major construction companies. Henk Langenhoven, a senior economist at the SA Federation of Civil Engineering Contractors (Safcec), said yesterday about 27 000 people had lost their jobs in the first half of this year compared with last year as employment in the sector declined by 15 percent. Langenhoven said the deterioration in employment in the sector was also accelerating.

Employment declined by 7 percent in the 12 months to end-March this year but the pace of decline more than doubled to 15 percent in the 12-month period to June. Langenhoven attributed the job losses to the slow awarding of major contracts by the government, adding that the winding down of order books was now filtering up to some of the bigger companies. Safcec has forecast turnover by its members would slump by 40 percent this year. Langenhoven was not that optimistic about the prospects for the sector in the second half. "I suspect it (the decline) is going to continue but hopefully not at the same rate."

The slowdown in project awards includes Eskom's power station expansion programme, Transnet's capital expenditure programme and major planned public sector prison and hospital projects across the country. Wilson Bayly Holmes-Ovcon confirmed it had cut its total workforce in South Africa by 15 percent, or about 300, half of them permanent staff, in the year to June. Aveng has reduced its permanent staff by 367 in the same period, while contract workers employed on the group's projects, several of which were related to the World Cup, have been reduced by 4 800. Roger Jardine, Aveng's chief executive, attributed the job losses to a softening in the market and major projects coming to an end. "Ideally when you work on a big project, you want to redeploy workers to other projects. But we don't have other big projects," Jardine said. Group Five's head count has only declined marginally by 202 jobs to 10 077 this year from 10 279 last year.

Junaid Allie, Group Five's human resources director, said there were about 200 retrenchments in the group's materials and manufacturing business because it was under significant market pressure and it had taken the opportunity to refocus this business. Allie said the group's core construction business was less affected, adding that it was able to move people around within the group, which kept its employment levels stable. However, Allie said the outlook for employment in the sector was "tough". "We don't have any retrenchment plans in place and our approach is to procure additional work and to hold onto the employees we have," he said. Erica Grace, the human resources director for Basil Read, said the company had had minimal retrenchments in the past year and any job cuts were in the building division and related to projects ending.

Graham Pirie, the chief executive of Consulting Engineers South Africa, said there had been some shedding of jobs in the consulting engineering sector but to date it had not been significant. However, Pirie admitted that the project pipeline had shortened and the government's R846 billion infrastructure programme in the three years beyond the World Cup had definitely slowed down while the "level of implementation was not what we expected". Cees Bruggemans, the chief economist at FNB, said that while the building industry was entering what looked like a prolonged trough in residential activity, non-residential building activity was expected to continue sliding for at least another year. Activity levels were heavily off in civil engineering and might go negative shortly in construction works.

Business Report
Roy Cokayne